The most effective business executives are those who recognise circles of competence. Instead of trying to change rules, they get results by working creatively within them. Among the better known exponents is now 82 year old Sol Kerzner’s application of Apartheid’s “independent” homelands policy to create a casino empire.
After 1994, Kerzner took his idea global by partnering with “first nation” groups in North America, a playbook soon picked up by others. But none have done so quite as aggressively as $70bn US pharma multinational Allergan.
Patents on Allergan’s lucrative eye drug Restasis were recently transferred to the Saint Regis Mohawk tribe from upstate New York. The tribe’s protected legal status is being used to shield the patents against legal challenges from competitors and guarantee Allergan’s profit stream. In return, the tribe has banked an up-front fee of $13m with an annual annuity stream of up to $15m in prospect.
These laws were never designed for this purpose. Then again, capitalism’s defenders have long forgotten how its greatest proponent, Adam Smith, warned us it only works properly when underpinned by a moral base. Sometimes boardroom jockeys are too clever for their own longer-term good.
